Updated from 12:01 p.m. EDT

Commerce Bancorp ( CBH), under siege the past month over its involvement in a Philadelphia municipal corruption scandal, reported a 46% jump in second-quarter profits and announced a series of steps to revive its flagging reputation.

The New Jersey-based lender posted earnings of $66.2 million, or 79 cents a share, compared with $45.3 million, or 63 cents a share, in the year-ago period. The Thomson First Call consensus had the bank earning 78 cents in the quarter.

The company said it expects to meet or exceed earnings expectations for the rest of the year.

Total revenue at Commerce, however, came in slightly below Wall Street's expectations. Revenue in the quarter was $337 million, compared with the First Call estimate of $340 million.

But investors overlooked the soft revenue numbers and were focusing more on steps the bank is taking to respond to the municipal corruption scandal. After falling 2% earlier, the stock was recently up 26 cents to $55.44.

Still, the stock is down nearly 18% since two Pennsylvania bank executives were indicted in a Philadelphia municipal influence-peddling scheme two weeks ago. Federal prosecutors have charged that the two bankers were part of a criminal conspiracy to arrange special loans for a former Philadelphia official who in turn awarded lucrative bond underwriting and other banking deals to Commerce.

The main action taken by bank officials in response to the scandal is a decision to exit municipal bond underwriting because of the scandal. On a post-earnings conference call, the bank said it was taking the action to eliminate any lingering questions about its municipal government work, even though prosecutors didn't implicate Commerce's bond underwriting team.

"One of my most important jobs is to protect the reputation of the bank," says Commerce's Chairman and President Vernon Hill. "Despite the fact we believe our people did nothing wrong, it's obvious to us we didn't take enough steps to make sure our brand is protected."

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